Primerica Exam Terms Flashcards
A qualified retirement plan in which the employee can set aside a portion of their income with pre-tax dollars.
401 K Plan
Absolute Assignment v. Collteral Assignment
Absolute: permanent and irrevocable transfer of rights and/or by the policyowner.
Collateral: temporary and/or revocable transfer of benefits by the policy owner
Accelerated Death Benefit
Policy provision that allows full or partial payment of the policy’s death benefit before the insured’s death if he/she is terminally ill
An extra cost rider that requires the insurance company to pay an additional benefit in the event that the insured dies within 90 days of an accident as a direct result of the accident
Accidental Death Benefit
Accumulate at Interest
The Dividend Option where the policyowner leaves the dividends with the insurer to invest and earn interest
Since the insurer created all the documents of the contract, any ambiguities in the contract will be settled in the favor of the insured. Since the insurer wrote the contract they are stuck with it.
Adhesion
The tendency for less favorable risks to seek or continue insurance to a greater extent than more favorable risks
Adverse Selection
A legal document containing the terms of the agreement between the agent and the insurance company. It clearly defines what an agent can and cannot do, and how he/she will be compensated.
Agency Agreement or Agency Contract
Expressed: Power or authority specifically granted in writing to an agent by the insurance company in their Agency Agreement.
Apparent: Power or authority that the public reasonably assumes an agent has based upon his/her expressly granted by the company but that an agent can assume or that are implied he/she has in order to transact insurance business
Agent Authorities
Agent/Producer
Anyone who sells or aids in the selling of insurance. Legally represents the company
Agent’s Report
A written report from the agent submits to the insurer along with the application disclosing what the agent knows, observed, or learned about the proposed insured’s risks
Aleatory
Unequal exchange of value. One party may obtain a far greater value than the other under the contract
Term Life Insurance contract which gives the policyowner the option to renew the policy each year without showing proof of insurability. Premiums increase at each renewal.
Annual Renewal Term
The person that buys an annuity; may or may not be an annuity’s policyowner.
Annuitant
contract/policy that guarantees to pay income for a specified period of time or for the life of the annuitant. Designed to prevent people from outliving their savings.
Annuity
Authorization of an agent/producer by an insurer to represent the company.
Appointment
The period of time between the youngest child turning 16 and the widow(er) reaching retirement age during which no Social Security Survivor Benefits are paid to the surviving spouse.
Blackout Period
Business use of Life Insurance where partners in a business buy life insurance on each other. They agree that when one of them dies the survivors have the right to purchase the deceased partner’s share of the business. The death benefit from the insurance is used to finance the purchase.
Buy-Sell Agreement
Policyowner receives a lump-sum payment of the current cash value of the policy upon surrender of the policy. The policy cannot be reinstated.
Cash Nonforfeiture Option
Upon maturity of an insurance policy the beneficiary receives a lump-sum payment of the entire policy proceeds due.
Cash Settlement Option
That part of an insurance policy that is the equity amount legally available to the policyowner. The cash value accumulates throughout the duration of the policy. Also known as living benefit or policy savings.
Cash Value
Public official in charge of the state’s department of insurance. Charged with regulating the insurance industry in his/her state by enforcing the insurance laws.
Commissioner
Certain conditions must be met in order for policy to pay-out.
Conditional
An interim insuring agreement under which the insurance company agrees to start coverage on the later of either the date of application or the date of the medical exam IF the proposed insured is found to be insurable on that date.
Conditioner Receipt
necessary element of a contract; something of value exchanged for the transfer of risk. Insured’s consideration is payment of premiums and truthful statements on the application. Insurer’s consideration is promises contained in the contract.
Consideration
Contingent Beneficiary
An alternate beneficiary designated to receive the policy proceeds in the event that the primary beneficiary dies before the insured.
Contributory: Group insurance plan under which the employees contribute to the payment of premiums. Noncontributory: A group insurance plan in which the employer pays all the premiums for the policy.
Contributory Plan v. Noncontributory Plan
Term insurance that specifically permits “conversion” of the policy into permanent protection without proof of insurability.
Convertible Term
Term life insurance in which the face amount of the policy decreases over time in scheduled steps. Most often used to cover a debt obligation (mortgage).
Decreasing Term
Distributions paid out by insurance companies. Stock insurers pay dividends (portion of profit) to stockholders and they are taxable. Mutual insurers pay dividends (return of unneeded premiums) to policyowners and they are not taxable. Dividends are never guaranteed.
Dividends
The annuity that has a guaranteed minimum interest rate and allows the annuitant to invest money in an index (i.e.: S&P 500). The investments grow as the index grows.
Equity Indexed Annuity
Estoppel
Legally preventing someone from asserting or re-asserting a known right that they have previously
waived.
Nonforfeiture option where cash value is used to make a single premium payment on a Term Insurance Policy of the same face amount as the original policy. Original policy can be reinstated. Not available on rated policies.
Extended Term Insurance
Amount payable in the event of death of the insured. Also called face value, death benefit, policy proceeds, coverage, stated amount, indemnity amount or proceeds to the beneficiary.
Face Amount
Facultative Reinsurance vs Treaty Reinsurance
Facultative: Transferring risk from one insurance company to another on a policy-by-policy basis. Treaty: Transferring risk from one insurance company to another under a blanket agreement.
A federal law that protects consumers in regard to their credit history. Establishes guidelines for how companies can access consumers’ credit reports and what types of disclosures and notifications are required.
Fair Credit Reporting Act
In determining how much life insurance is needed the needs of the surviving family are the focus. Using needs analysis worksheets, an amount is determined to meet the needs of the surviving family regardless of the earnings of the insured.
Financial Needs Approach
Life Annuity that guarantees a fixed dollar payment at regular intervals during the lifetime of the annuitant.
Fixed Amount Annuity
Upon maturity of an insurance policy the beneficiary receives periodic payments of a set dollar amount from the policy proceeds.
Fixed Amount Settlement Option
Upon maturity of an insurance policy, the beneficiary receives income from the policy proceeds for a stated period of time.
Fixed Period Settlement Option
A policy provision required by state law that establishes a set number of days (usually 10) for the policyowner to review a newly issued policy. The policyowner may return the policy to the insurer during this time for any reason and receive a 100% refund. Also known as refund provision, unconditional refund provision, return provision, exchange provision, or right to examine.
Free Look Provision
General Account vs Separate Account
General Account: Contains the regulated, or
guaranteed, funds of an insurance company. Separate Account: Contains the investments of an insurance company. These investments have no guaranteed rate of return and are regulated by the SEC and NASD.
A prescribed period of time during which the policy stays in force without the payment of premiums. Mandated by state law and is usually 30 or 31 days.
Grace Period